Dish Network Chairman and CEO Charlie Ergen says a lot of things amid long, circuitous statements made during quarterly earnings reports.
If you paid close attention, he said something last week that seemed to be huge.
“I think that OTT today is becoming a direct replacement for cable and satellite,” he told media investment analysts and journalists covering Dish’s fourth-quarter earnings.
Ergen’s comments exist in direct opposition from Dish’s brand position on products like Sling TV, dating back more than two years. On countless occasions, Sling TV CEO Roger Lynch had insisted that IP-based pay-TV products like Sling TV were merely aimed at youthful cord-cutters and cord-nevers who weren’t part of the pay-TV market anyway.
“When we first launched, our focus was people who had already cut the cord or millennial cord-nevers,” Lynch said, explaining Ergen’s verbal sea change.
When Sling TV arrived on the scene in February 2015, it had only about a dozen channels and no local broadcast stations, Lynch noted. Targeting only cord-cutters made sense.
“We have over 100 channels now,” he added. “We have locals in many of the major markets. And so we are able to attract a much broader audience than we were able to in the beginning.”
Of course, Ergen might not have come out and said it previously, but the message of replacement over complement had been pretty overt in Dish’s ad campaign for Sling TV, in which glowering character actor Danny Trejo tells viewers that cable is even scarier than he is.
It’s worth noting that even amid its aggressive promotion of DirecTV Now’s launch late last year, AT&T executives never publicly billed their v-MVPD platform as anything more than a niche product—even though reports surfaced that they actually believe it will eventually replace the traditional satellite platform within five years.
Ergen’s declaration came shortly before Wells Fargo analyst Marci Ryvicker asked him if he’d say how many customers Sling TV added to Dish’s bottom line in the fourth quarter. “No,” he responded.
There was no doubt that the Sling TV number was big. Dish had reported customer losses in each of the 10 previous quarters. It had suddenly ended the drought with customer additions of 28,000 in Q4. There was no promotional price rollback or any other reason to suspect the traditional satellite platform had stopped hemorrhaging customers.
“The OTT trends are up,” Ergen conceded. “And I think those are just general trends that have been going on for two or three years. They really haven't accelerated in a material way, but at some point perhaps they will, particularly as more people come into the OTT market.”
Indeed, the era of TV via satellite seems a bit more finite.
Sling TV’s increasing importance to Dish comes as analysts marginalize the core satellite platform in M&A discussions about Dish. Pondering the declining number of purchase suitors for Dish, Telsey Advisory Group told investors last week, “Verizon might be interested in Dish's spectrum but likely not Dish's satellite TV business.”